The housing crisis is set to go on for years because not enough homes will be built.
That’s the view of the Economic and Social Research Institute (ESRI) who said yesterday that 25,000 houses will have to be built every year to meet growing levels of demand, but the country is nowhere near those levels.
The total of new builds for this year is expected to be around 12,000 and the ESRI has suggested the necessary target won’t be met for at least another three years.
The forecast coincided with figures from the Department of the Environment, showing that there are now more than 5,101 people living in emergency accommodation, including 774 families with 1,638 children. The figures mean since last January there has been a 93% increase in family homelessness and a 16% increase in adult homelessness.
The ESRI also said that government policy reform could aid new housing development and suggested the introduction of a land tax that would increase in line with house/land prices — as currently exists in Denmark and other countries — could be looked at in greater detail in an Irish context, as it has proved to be an incentive to sell/use underdeveloped or vacant land in periods of increased demand.
It also noted that the Government’s targets for social housing, up to 2018, are unlikely to be met.
“One possible way of achieving a significant increase in social housing provision is for the State to provide this through local authority schemes as it used to prior to 2009,” it said.
The ESRI sees the economic contribution from the construction sector increasing next year, but warned housing supply will continue to “undershoot demand” and remain “the crucial issue”.
“While the pace of economic growth has increased, we identify issues in the housing market and a potential significant downturn in global trade in 2016 as downside risks to our forecasts,” the ESRI’s David Duffy said.
Overall, the ESRI is forecasting economic growth for GDP of 6.7% this year, to be followed by 4.8% growth in 2016. The official unemployement rate should stand at 9.3% at the end of this year, it said, but could fall to 7.5% by the fourth quarter of 2016.
“While the national accounts have experienced a significant degree of volatility in 2015, with trends in patents and aircraft leasing having a particular impact, it is important to acknowledge the economy has experienced real and significant growth in 2015,” said the ESRI’s Kieran McQuinn.
Consumer spending is expected to keep growing, while exports should grow by over 13% this year before slowing to 7.6% next year.